NGI The Weekly Gas Market Report / NGI All News Access

Northwest Says El Paso Violating GISB Rules

Northwest Says El Paso Violating GISB Rules

As El Paso Energy sets about to become the biggest and best in practically every sector of the natural gas and electric industry, its key gas pipeline subsidiary - El Paso Natural Gas - has distinguished itself on another front: it holds the record at FERC for the most complaints filed against a single company.

The latest complaint comes from Northwest Pipeline Corp., which has accused El Paso of violating the Gas Industry Standards Board's (GISB) standards pertaining to confirmation deadlines and confirmation quantities.

Specifically the complaint, which was filed Jan. 25, accuses El Paso of making adjustments to confirmed amounts scheduled to flow between the two systems "after" the confirmation deadline, creating scheduled quantity discrepancies for shippers on Northwest. Northwest contends El Paso's practice violates GISB standards requiring connecting pipelines to make the necessary revisions to confirmed amounts (either due to capacity constraints, confirming party reductions and/or associated balancing cuts) "prior" to the confirmation deadline.

El Paso's alleged flouting of GISB standards has taken its toll on Northwest shippers, the Williams' pipeline said. It cited a hypothetical situation to underscore the impact of El Paso's actions on Northwest shippers: shipper A on Northwest seeks to transport 12,500 Dths to shipper B on El Paso; both Northwest and El Paso send confirmations to each other for that amount prior to the confirmation deadline, but after the deadline (when El Paso makes adjustments for confirming party reductions and other factors), El Paso sends Northwest another confirmation for a reduced amount - 7,500 Dths. "El Paso's failure to comply with the GISB standards results in a negative financial impact to shipper A [who has] paid both its upstream supplier and Northwest based upon the scheduled quantity of 12,500 Dths on Northwest," but who was reimbursed by shipper B on El Paso only for 7,500 Dths. "Essentially shipper A has 5,000 Dths of unaccounted for gas that it cannot do anything with until the pipelines agree what the scheduled quantity should be," Northwest told FERC.

As a temporary fix, Northwest said it agreed to adjust its scheduled quantities to match those of El Paso's between November 1998 and June 1999. But afterward it told El Paso that it would have to comply with the GISB standards. "As of the date of this complaint, even though Northwest has talked with El Paso on numerous occasions each month..., El Paso has failed to comply and is still basing its scheduled quantities on confirmations submitted after the GISB confirmation deadline," Northwest noted.

Northwest said it has received "numerous complaints" from its shippers regarding the scheduled quantity discrepancies with El Paso. It has on occasion since last June created shipper imbalances on its own system to resolve the discrepancies, Northwest noted. In fact, it estimated that scheduled quantity discrepancies owing to El Paso's alleged failure to comply with GISB standards were about 110,000 Dths in December alone.

Northwest said it sought the help of the FERC Enforcement Hotline last October, but was told it couldn't address Northwest's problem because of the ongoing complaint that Amoco Production and others had filed against El Paso for its capacity-allocation practices. Even though FERC issued an order on the complaint in the Amoco vs. El Paso case in November, the Enforcement Hotline still refused to take up Northwest's problem, according to Northwest.

After being rebuffed first by El Paso and then by the Enforcement Hotline, Northwest said it had no other choice but to file its complaint. The complaint asks the Commission to order El Paso to comply with the GISB standards by honoring the confirmations that it sends prior to deadline. Also, it wants the Commission to order El Paso to calculate the scheduled quantities between the two pipeline systems dating from June 1, 1999 forward, based upon the confirmations El Paso sent to Northwest prior to the confirmation deadlines.

Northwest said it couldn't "readily quantify [the] financial impacts or burdens" that El Paso's alleged GISB violations have caused for its system, but it noted it has resulted in the "devaluation of Northwest's capacity" because of the uncertainty surrounding the delivery of gas to and receipt of gas from El Paso. "Northwest has also had to commit personnel resources to try and resolve this matter as well as to address its customers' dissatisfaction."

The complaint revisits a similar case where Northwest sought to have after-the-deadline confirmations imposed on PG&E Gas Transmission-Northwest in order to accommodate the scheduling of an upstream Canadian pipeline that wasn't subject to the GISB standards. Although FERC was "sympathetic" to Northwest's plight, it held there was nothing in the GISB standards that required PG&E GT-NW to meet Northwest's request for a later confirmation schedule.

Northwest believes that decision should apply here. "There is nothing in the GISB standards, in the Commission's regulations or in Northwest's tariff that requires Northwest to accommodate El Paso's late confirmations," it said.

Susan Parker

©Copyright 2000 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus